Sydney, 09 January – Australia’s
commercial property sector rose to new heights in 2014, with the bourgeoning
industrial market a key driver underpinning the $26.8 billion in property sales
that changed hands during the year.

According
to CBRE Research, commercial property sales increased 6% in 2014 from the year
prior, with $14.5 billion in office property and $7.3 billion in retail assets transacting
during the 12 month period. Industrial
sales accounted for $5 billion worth of transactions, surpassing the previous
record level of $4.9 billion set in 2006 and providing a 55% jump on 2013’s
total.

CBRE’s
Head of Research for Australia, Stephen McNabb, attributed the strength of the
market in 2014 to a flurry of transactions in Q4 and continued growth in the
industrial market.

“Industrial
sales grew by 55% year-on-year, driven by a number of large portfolio sales,”
Mr McNabb said.

“Activity
is being prompted by divergence of opinion as to the degree to which yield
compression can continue. Strong yield compression in the super prime sector
(80-90bp in Sydney/Melbourne) through 2014 prompted selling from some owners,
in an environment where new sources of demand are looking for income yield
combined with an expectation that the risk of yield softening is low.”

“Despite
a slow start to industrial sales volumes in 2014 with only modest figures
recorded at the end of Q2, based on the volume of sales and enquiries we were handling
back in July, we made the call that 2014 would set a new benchmark and that’s
how it’s panned out, reaching the $5 billion mark for the first time,” Mr
Haddon said.

“Given
the volume of deals currently in the pipeline and the number of quality assets
due to come to the market in Q1 this year, we see this volume of sales being
sustainable for the foreseeable future and don’t believe that 2014 will be
viewed as a ‘spike’ in any way,” he continued.

“Sydney
and Melbourne experienced a strong year of office sales, accounting for 80% of
office turnover nationally, compared to 65% in 2013,” Mr McNabb said.

“This
is consistent with stronger demand for assets in these core markets in which
the vacancy risk over the next few years looks more contained for both prime
and secondary assets.”